Skip to content

#360 Is Money a Guarantor of Success? A Question for Funders

December 5th, 2019

Richard Marker

An earlier version of this post led some readers to infer that this was about only one incident in the philanthropy world – and read it “personally.” In fact, I intended my introduction to give an example of tendency in our philanthropy sector to sometimes be more impressed by the resources than the results. In order to eliminate the potential for it appearing to be a judgement on any one case, I have re-written this.

There is a tendency in the media, and even within our philanthropy field, to be blinded by big bucks. A nine figure gift is guaranteed to get a headline and other larger gifts are likely to get outsize attention. An Accompanying articles will mention the recipient organizations and how the money will be used in general terms, but rarely will those articles address whether the recipient is well-suited to implement such a gift, have a proven track record in the field, have a particular theory of change that makes this a potentially transformative gift, or even who else in that field may be doing important, if unsung, work in the same field.

In fact, if one looks closely at most of those gifts, we find that numerous organizations have been working in those sectors for a while, some for years. A few of these may have made some real impact, others not so much. Few, if any, though, were launched with the funding of this new gift and none ever received the attention this new gift has received. Indeed, if one were not familiar with the sector, one might conclude that a newly well endowed organization is about to plow virgin land even though it has yet to announce exactly what it intends to do. It is as if money talks more than accomplishment.

This is not a new phenomenon and represents a cautionary tale for those of us in the funding sphere. There are funders who always prefer an exciting new venture – assuming either that “new” must be better than “old” or, perhaps, if the “old” organizations really knew what they were doing, there wouldn’t have been the need for a new one. Indeed, sometimes that is true. And it has been my privilege, both as a CEO of a foundation and a trustee of others and even as a personal funder, to have been involved in launching some extraordinary and creative start-ups that really did push their respective fields into new and exciting areas.

But not always. When I was the CEO of a foundation, we also made some flawed decisions. Sometimes we overlooked quite successful, if un-showy, organizations in favor of those with more sizzle and pizzazz. Sometimes we pushed wonderful boutique organizations to reach for scale, in the process forcing them to lose the uniqueness that got them there – and all too often destroying them in the process. We occasionally were so committed to “transformation” that we underestimated the long-lasting on the ground, efforts that are always indispensable for any change to have staying power. And, let’s be honest, we too often were taken with early stage charisma more than solid competence and creativity.

That we were not alone in these missteps does not exempt us from responsibility. All too often these errors were because I was taking the lead from others who seemed to have done their due diligence. If colleagues I respected were funding them, why should I spend my time repeating what they had presumably done? Moreover, I had plenty of other due diligence or monitoring or relationship building to attend to. Why not trust those who had already made informed affirmative – or negative – decisions? Yes, even funders have a tendency toward a herd mentality. [Once, following the lead of a goodly number of fellow funders, many of whom we had previously partnered with, we made a grant to what seemed to be a successful and innovative program. Almost immediately I found the executive to be intolerable, the organization unwilling to submit required financial reports, and, literally from the day they received their commitment, they were asking to renegotiate for more. Finally, I called a couple of other funders to ask if that was their experience as well. One said: “We hold our nose and fund them anyway.” Mea culpa. I could and should have discovered that before encouraging our funding.]

There are lessons that have served me well in making subsequent judgments about grantees. More, they have served me well in reminding me of the essential humility that needs to accompany all of our thinking as funders. After all, when we fund, we fund the future, and no matter how evidence-driven or seemingly a no-brainer, nothing about the future is guaranteed. And if we are trying to fund “change”, all the more so.

I don’t want to trivialize or be dismissive of the advantage of resources. After all, far too many non-profits trying to do good and important work have been handcuffed by profoundly inadequate resources. And, there are still too many funders who hold that against them – as if poverty – even among non-profits – must be deserved and even punished. [This was written but not published before the shameful cutbacks in SNAP funding announced by our heartless pseudo US administration. In one heartless stroke, 700,000 people will lose coverage. Those of us in the philanthropy world should take note and make sure we aren’t implicitly doing the same thing in how we treat under-resourced nonprofits.]

Our field has a tendency to forget that the very term “not for profit” was coined precisely because it assumed that social service work will never be profitable – or generate surpluses. There is no doubt that cash reserves of 3 to 6 months are signs of a healthy organization; but, with government cutbacks or a history of hand-to-mouth finances, not every organization providing quality on the ground human services can imagine that kind of financial security that we as funders prefer. Should we as funders penalize them for that? This goes beyond the current, long overdue, commitment of many in our field to provide operating support; it recognizes the fragility that defines a very high percentage of on the ground nonprofits.

It is true that greater resources can allow greater impact. Sometimes those resources are hidden from view but allow an organization to have a healthy infrastructure that ensures increased effectiveness. Sometimes those resources are very visible – allowing marketing muscle to bring attention of a cause to the public so that responsible public policy can be enacted. [The reverse is also true, of course.] And sometimes sufficient resources can fund continuing r & d so that successful organizations can continue to be successful. And sometimes it is because there are only a very few organizations with the size and capacity to absorb mega gifts.

But it is also true that too often we are blinded by the money part and pay far too little attention to the underlying theories of change or whether those funds are going to where the needs are greatest or whether they will be used as effectively as a less well-funded organization might…

Around this time of year, our media celebrate voluntarism, the grassroots work that so many do throughout the year, the necessary boots on the ground of so much social service. They rarely talk about the professional staff, often underpaid, who make it happen and whose work goes unrecognized the remaining 51 weeks of the year.

It is a fair bet that the same media will give headline attention to a mega gift at any time of the year. That coverage is typically of the voyeuristic type, more engaged with the donor than on the needs the gift is supposed to address. There has been a good deal written in the last couple of years about the implications of the concentration of wealth for the nonprofit sector. Those of us in the philanthropy field are discussing the issues of equity at every conference. However, I daresay that most mainstream media haven’t paid that much attention to our heartfelt self examinations.

At this time of year, let’s celebrate generosity in all of its forms and at every level. Let’s also not get blinded by outsized gifts that may or may not accomplish what is really needed. Money talks and money matters, but in the field of real human need and social inequity, money alone does not guarantee success.

#359 – Talking about “Equity” is Easy; Sharing Power is Hard

November 26th, 2019

Richard Marker

It is hard to imagine that anyone in the philanthropy field has not participated in, read about, or been engaged with questions of “equity”. In fact, one would have to be willfully distracted to not be aware of its prevalence over the last couple of years.

Since so much has been written, said, published, and sometimes even implemented, I will take for granted that any reader of this piece does not need a primer. Our genuine concern with underlying systemic issues combined with legitimate concerns with the overt disparity of wealth distribution means that our field has both a mandate and a challenge at the same time. And to the credit of our sector, the discourse has been informed, caring, and purposeful even when there is a wide range of thinking about what all of this means – for us and for public policy.

It is in this context that I would like to comment on a program I attended recently which explicitly was marketed as a “conversation about racial equity.” [Since I don’t have permission of the organization or the speakers to publicly identify them, I will respect anonymity and trust that only a very few readers will know to whom I am referring.]

While advertised as a conversation among trustees, truth be told it was really a series of presentations. That may seem a nitpick but it does mean that I cannot say whether my responses are representative of other funders in the room or not. There is no question that the personal stories of how the presenters, persons of privilege, learned of the depth and reality of racial injustice and inequity were moving and convincing. This sensitivity has clearly influenced their philanthropic giving priorities and even the ethos of the organizations and foundations they head. One can and should applaud their honesty, sincerity, and commitments.

And yet… I kept thinking about the bottom line of how this all plays out. There was only time for one question, and the one question, by a very prominent woman of color [a relevant datum in this context], was the same one I kept thinking about – governance. Who is on the board? Who makes the decisions? What are the implications for family funders who are the source of the money and who have legal control of the money?

As one who has participated in my share of equity related discussions and has observed many more, I was struck by the absence of any reference to some of the mantras that inform our thinking: even if they didn’t use the term “participatory grantmaking” or quote the catch-phrase “nothing about us without us”, I would have welcomed something more than that they were personally awakened, their grantmaking priorities had changed, and even their staffing was more reflective of a racial balance. These things matter and I am not dismissing them.

But in response to the question about governance, the principals on the panel were unequivocal. One said “it is my money and…” Another said, “it is our family foundation and only family can sit on the board.”

This is not a criticism of those forthright and honest answers, but I would have liked a response that showed that they understood the complexity of those answers. Power and privilege are very real. It is naïve to think that there are easy ways to share them or even when or if one should surrender them, but those of us who have that power and privilege need to at least demonstrate that we understand what that means.

The absence of these sensitivities was particularly striking at this event. These are people who really care – in very personal ways, in philanthropic ways, in behavioral ways. They all demonstrated that they knew the difference between tokenism and enfranchisement. They all set a personal standard to which most in the philanthropy field should still aspire. They really do want change and want to model it as well as they know how.

I myself struggle with the line between enfranchisement and empowerment. I don’t know if and when we have a moral and ethical and historic obligation to cede at least some power in the board room, and if so, how far that should go. Especially for family funders, it is a genuine dilemma for which I can’t propose a facile solution.

But, acknowledging that, I still would have liked to see more self-awareness of the governance control dilemma from these thoughtful, caring, and committed funders. If it is that hard even for them to talk about, it is clear how far we have to go, as a field and as a nation, to really redress the deep-seated racial and social inequities that are so endemic to American society.

#358 – It’s That Time of Year Again…The Family Philanthropy Meeting

November 21st, 2019

Richard Marker

Yes, we are approaching that time of year again. You know, the one that Hallmark celebrates 24 hours a day, filled with song and mirth and everyone celebrating together despite the inevitable travails, misunderstandings, and missteps. Somehow, by the end, it all works out perfectly. Sure, why not?

I don’t know for sure, but it is possible that Hallmark doesn’t accurately portray your family, or mine. Let’s face it, in reality, most families, even when they celebrate together, have challenges. Sometimes those challenges are simple differences in style or distance. Other times, competing life expectations are difficult or impossible to ignore.

Many families use these holiday occasions for family meetings. For good reason. It may very well be the only time of the year when almost everyone is in the same place at the same time. If it is a family with shared financial responsibilities, the family meetings can be formal, and if the resources warrant, are often accompanied by non-family specialists such as attorneys or wealth advisors. Other times they are less formal, focused on the normal challenges of multi-generational families regarding senior citizen needs, property maintenance, and the like.

I am not a family systems expert, nor an attorney, nor a wealth advisor. But I do know something about family philanthropy [which requires that I also know at least a little something about family systems, law, and money]. It is often around the philanthropy meetings that the issues of expectations, values, life choices, intergenerational or sibling tensions get played out. The reasons are complex but, in general, it is because the philanthropy conversations can be an indirect proxy for all of the inherent issues of family dynamics. To take one of many possible examples: It may be overtly confrontational to accuse a sibling of being ego-driven and using family resources for personal social gain. It is a lot safer to allude to those things when that sibling insists on having his or her name prominently featured by a charitable entity and to address the implications for the rest of the family. Or for another: it may be awkward to accuse the founding generation of heavy-handed control when they are also the ones who have made your lifestyle possible. But it might be possible to get to that issue of control, circuitously, when that same founder insists that his or her charitable commitments must be endorsed by the grandchildren, even if reluctantly. It is a difficult discussion to be sure, but, when done well, that discussion can be about priorities rather than personality.

That these can be difficult meetings should not mean that they should be avoided. Rather it means that they often can benefit by being carefully planned or even facilitated by someone who understands the full picture. If structured well, with a full empowerment of all at the table, these can lead to a renewed family motivation, unity, and purpose. That does not mean unanimity of style, values, priorities; only that the process can be fulfilling in underscoring that this is a family choosing to honor its heritage, its possibilities, and its potential. There are proven methods to get there, and when done well, can leave a family much more gratified than when they start.

For more than a quarter century, I have had the pleasure of teaching and advising literally several thousands of funders of all sorts. Most of them are family funders. Their starting point when they come to me, or to any of us who is in this sector, is often “giving money away is harder than we thought it would be.”

There are times when deep underlying unresolved family issues are never far from the surface. I have seen late-in-life decisions by founders to create a family foundation in the hope that contentious offspring will find a way to resolve those hostilities with a common legacy and responsibility. Sadly, philanthropy can never magically resolve these kinds of long-simmering, never-resolved family issues – at least on its own.

But for families with a more under-control set of issues, philanthropy can often enhance a family’s ability to appreciate one another and learn to make decisions together. They can lead to shared aspirations for successor generations and for a determination of how their noblesse oblige might be manifest in different places and in different ways.

Where might all of this play out? For many, at the annual family meeting. Since the decisions and feelings that will emanate from this meeting will last far beyond the aroma of even the most delicious holiday leftovers, it is worth putting time and resources into making it a productive and fulfilling experience for all.

Happy holidays.

#357 My Facebook Dilemma

November 15th, 2019

Richard Marker

“Sunlight is the Best Disinfectant”. Justice Louis Brandeis is credited with this affirmation of the legitimacy of unrestricted, even hate, speech. His argument is that exposing hate and dishonesty for what they are will rebut them more effectively than outlawing any speech, and on the whole, that approach has defined the American ethos and approach to speech in the public domain. In the US, behavior should have limitations, speech needn’t.

Such sentiments are not intuitively obvious, nor universally endorsed. Germany, for example, outlaws Holocaust Denial and Nazism since it wants to make it absolutely clear that the facts related to the nadir of human history, and their role in that, are not negotiable. Their Post-War leaders saw that the popular will can be manipulated too easily with horrendous results, so rebuilding and sustaining a democratic society requires no less than an absolute commitment to the truth. Truth and accountability matter; the risks, they felt and still do, are too great to compromise.

This very argument underscores the current debate about whether there should be limits on what social networks may or may not publish with impunity. In the world and age in which we now live, so very different from the times of Brandeis, hate and falsehood are the all too frequent currency of willful manipulators with nefarious intent who use social media to shape the world to their own interests.

The reason this is so difficult is that, unlike the times of Brandeis, there is now an anarchization of knowledge. Too many assume that if they see it on the internet it must be true – or true-ish, or, conversely, they disbelieve all information assuming that whatever they hear or read is no more than opinion. A sobering example of this is Climate Change. If one looks hard enough, one can find someone online who sounds authoritative who disagrees with 99% of the scientists and the overwhelming evidence. If one wants support for “denial” one can find it. It is all too easy, in this early stage of on-line epistemology, to believe and espouse falsehood. Other examples abound.

The headline examples that have demanded our recent attention are the decisions of Facebook [and others, but FB is the prime example] to allow posts that are clearly dishonest, purposely politically malignant, and spew destructive hatred, xenophobia, racism, anti-Semitism, Islamophobia, and all forms of hatred. Their response to date is aligned with the Brandeis proposition that an informed reader can make an educated judgment. They are simply allowing open speech. [For this discussion I am discounting the profit motive issue since this debate would apply even if that weren’t a factor.]

Sadly, those arguments are neither persuasive nor morally acceptable in this era. The manipulation of the US election system – and others – has been unequivocally demonstrated. The destructive power of “believers” and those easily manipulated by disinformation and outright lies has shown itself to have lethal implications. If FB is the source of mediated or, more accurately, unmediated information for billions, they have a responsibility to understand the implications of what they choose to allow.

Having said all of this, perhaps the only responsible action on my part would be to close my Facebook account. After all, as some argue, only if they see that they have crossed a line that their customers cannot abide will they re-think their stance on what may be published or purchased.

But before making that decision, I want to take a step back: Facebook and other social networks have been transformative in creating virtual but authentic connections that otherwise would be lost. Some years ago, I wrote about how virtual communities have recreated communal connections after years of increased atomization. Suburbanization, for example, has served to isolate people from one another except in limited structured contexts. Gone are the incidental interactions that characterize organic community. All too often in the modern era, we don’t hear about the events in people’s lives, albeit most of them are transient and even trivial, that fill in the gaps between life’s chapter headings. And very often we don’t hear about the lives and deaths of people who are in your life but not central to it.

At least until Facebook entered the scene. Suddenly we see the trivial and the transient and the indulgent from an ever growing “neighborhood” of our choosing. We also keep up with events in the lives of people who may be around the corner or around the world many of whom may not be in our inner circle but about whom we care. How often have I learned about rites of passage or career changes or recognitions or even the passing of people who matter to me!

Some readers may recall an article I wrote 10 years ago after my mother’s death. I compared the responses at that time to those of the time when my father died a decade earlier. When my father died, I was still employed in a relatively well-known capacity and had a long list of related affiliations. Announcements were shared among the organizations with which I had a formal connection. Many expressed condolences and sympathy. When my mother died, I was self employed and had few ongoing professional affiliations, and the only announcement of her passing was on Facebook. Much to my surprise, the number of people who expressed condolences, even in person, far exceeded the earlier time. By a lot. [Others have shared similar experiences.]

I confess, I have had to learn a lot about what, when, and if to post. As time has passed, I have learned to be more disciplined about how I use social media. No one really needs to know every restaurant I visit, how often I am on Amtrak to NY, and all sorts of other trivia that once upon a time characterized my all too frequent postings. But many do appreciate when I have participated in significant meetings somewhere in the world, or been together with friends and colleagues who are also “friends” with lots of others, and even my Starbucks C.O.L. index has its followers. And I appreciate those kinds of postings from others. These may not be life changing events or life chapter headings, but they matter. They matter because they give a vibrancy and vitality to the everyday context of life: to my life and the lives of many who are part of the totality of what it means to live in communities, even when virtual.

That kind of incidental knowledge was what people used to take for granted in their daily lives, and we forgot about for a while. The reason FB is so popular is that it has allowed people to restore this natural kind of incidental knowledge and relationship. It works because it is real. And I am not sure how I would replace those kinds of interactions if I were to drop this most social of social networks. I have learned that many people matter to me, that I am glad to learn about some part of their daily lives, that it matters that I hear about their major life events even if at a distance of time and space.

So, indeed, it is a dilemma. Facebook as a company needs to be held accountable for major self-serving decisions that impact all of us in dangerous ways. Facebook as a system is necessary to help maintain social connections and virtual communities that impact so many of us in productive ways.

For now, with ambivalence, I have decided to stay the course [as some readers now see for themselves.] But it doesn’t exempt us from insisting that FB publicly calls out lies, rumors, and rejects all on-line presence from those who would distort and destroy.

No doubt that is very hard – for them; losing our democracy would be much harder – for all of us.

#356 – Now, About that Humongous Transfer of Wealth…

November 11th, 2019

Richard Marker

Reader alert: This piece, as #354 and #355, has a clear public policy point of view that many will find political.

One cannot be in the philanthropy world, the financial management industry, or the demographic field very long without hearing about the massive multi-trillion-dollar transfer of wealth. The amounts to be transferred from generation to generation boggle the mind. Surely it is so great to be transformative.

While I am neither an economist nor a wealth manager, I have no doubt that those numbers are derived from real data. I also have no doubt that wealth managers are hyperventilating over the fees that will accrue when these monies are invested, and fundraisers for both nonprofit and for-profit funds are salivating in anticipation. [I am only slightly exaggerating but in conference after conference, I see their evident enthusiasm.]

More relevant is that I am absolutely sure that some heirs and their families will be well cared for, as they used to say a century or more ago, “beyond the dreams of avarice.” But only some, and that’s the point.

If the transfer were in anyway broad-based and really likely to raise the living standards of everyone, the demographic projections wouldn’t be as bleak as they seem. Why is it that whole swaths of millennials assume that they will not achieve the financial security that their parents had, that they see home ownership as elusive, that they wonder how health care and social security and college loans will be paid for? And what about all those McMansions that were supposed to be guaranteed nest eggs that are now waiting and waiting for buyers?

Even after one of the longest economic expansions in history, middle class incomes are barely covering what they did a generation ago and certainly don’t reflect this great run-up in stocks or provide cushions against emergencies.

Now, let’s turn to the philanthropy piece of this: Initiatives like The Giving Pledge [full disclosure, I have a very peripheral connection] are intended to give some of those billions a place to do some good. And some of the signers are being very proactive with their funds to expand their giving to non-profits or at-risk populations or systemic social issues. But many who have committed at least 50% of their net worth to philanthropy have chosen to fulfill their pledge by funding their foundations upon their death. Far be it for me to malign that decision, but let’s be honest, that means that in many cases only 5% of that money will be distributed on an annual basis and only at some uncertain time in the future. That counts and that money is certainly important but hardly a game changing transfer of wealth to the non-profit sector. To date, sad to say, under 300 billionaires have signed on. There are many others who have yet to announce their intentions.

When looking closely at this massive “transfer of wealth”, it becomes ever more evident that it is a boon to the already wealthy, and a smidgeon to the vast majority of the rest of the population. If there has been an inordinate, and morally dubious, concentration of wealth in the hands of an ever-shrinking percentage of the population over the last years, this transfer is destined to intensify and solidify that oligarchy.

There are some public policy strategies that can help that transfer be more widely enjoyed. Most of these do indeed have an impact on the highest net worth among us; none of these will have the slightest impact on their lifestyle. I am sure that these 7 are not an exhaustive list, but I do feel that together they may begin to redress some of this accumulated equity imbalance:

1. Eliminate the cap on taxable earnings subject to social security tax. That is the single most regressive tax – with a much greater burden on lower- and middle-income earners, and an exemption to the highest.

2. Tax capital gains at the same rate as other taxable income.

3. Support some sort of guaranteed medical care for everyone. I doubt such a national insurance policy will ever come close to what congress grants itself or what top executives in the corporate sector receive, but it is an inequity widely written about. [I am purposely not applying terms such as “Medicare for all” or “Obama Care” etc. They have become so loaded and weaponized that it is impossible to discuss the true underlying issue.]

4. Support policies that restore SNAP funding to levels that make the measurable difference in reducing food insecurity for children, the working poor, etc. Studies show the impact in the workplace, in school performance, and in public health when the population receives adequate nutrition – or doesn’t. The financial return to the society as a whole will more than outweigh the short-term public expenditures.

5. Support a minimum wage that doesn’t guarantee continued poverty. Assuming that the working poor can actually live on $15/hour in almost any municipality in the USA is willful neglect. The deteriorating impact on society of the growing homeless population, even of people working full time, is measurable. We can argue about employment statistics, but it is unconscionable that those numbers are on the backs of full-time workers who can barely afford housing.

6. Support the development of reliable, regular, and widespread public transportation. Those without access to public transportation are fully reliant on private automobiles. For many, that is the second largest annual expenditure after housing. And, needless to say, that impacts lower income folks the most. If one can provide the kind of public transportation taken for granted in many parts of the world, it would immediately provide an increase in net spendable income, reduce the palpable tension in the workplace caused by driving to and from work [according to several studies], and help to sustain engaged community involvement [that has dropped precipitously over the last 2 generations].

7. Restore Pell Grants and the equivalent to the levels they were originally intended. When developed, they were the second most significant source of higher education tuition funding [after the GI Bill]. Millions of lower middle-class people earned college degrees through those grants without incurring back-breaking debt. As those grants have been eroded over time, they have moved from being the “leg-up” to just another bureaucratic burden with minimal return. Simply restoring those funds to the level they were originally intended [inflation adjusted] would make a huge difference in reducing the $trillions of debt too many college graduates carry.

Now, of course, while some of this will require increases in taxes, let’s be clear -that is why we have taxes. “Tax” is not a dirty word – taxes are how we express our individual commitments to having a functioning society. An equitable tax system, without undue breaks for those who need it the least, is the truest form of a “trickle down” economy.

Now I know that some lobbyists will argue with every one of the 7 points, and I am not so naïve to think that whoever gets elected will find it simple to enact public policy that easily. But I do call upon those who will be the primary beneficiaries of the much-celebrated massive wealth transfer to lead the way. For most, it will be painless.

Several years ago, I was meeting with a very wealthy family in another country. The scion, the oldest of Gen-2, told me that he and his peers felt very bad that so many people in their community could not afford the kinds of wedding celebrations that they had. Did I have any thoughts on how they could address that social stigma and provide the less wealthy with the kinds of weddings the wealthy took for granted? I asked this fellow if he and his fellow wealthy had ever considered toning down their own over the top ostentation that only reinforced the wealth divide and played into that very stigma. It would reduce the social pressure and the need to create an entire funding enterprise. It had never occurred to him or his peers. It caught him off guard to suggest that their behavior sets the standard that leads to that perception of inadequacy and that they might have a role to play in reducing that divide.

Perhaps it is time for those whose wealth exceeds any possibility of human consumption to ask themselves that question. It might make a modest increase in taxes more palatable, and it might lead to a level of empathy that would change the social discourse in less judgmental and patronizing ways.

And ultimately make that transfer of wealth something all can celebrate.

Today is 9 November 2019; please see post #324

November 9th, 2019

Richard Marker

#355 – Philanthropy Can and Must Do a Lot – But We Cannot and Should Not Do it All

November 4th, 2019

Richard Marker

Reader alert: This post, as in #354, has a very clear political point of view, at least at the beginning. You may wish to read #354 prior to this one.

This piece is difficult to write since I have so much disregard and antipathy for the current administration. An article advocating a crucial role for government, as this one will, must therefore take a leap of faith that some sense of normalcy and affirmation of civil society will return to the United States in due course. So, onward….

Since the Reagan years, politicians have been running on the concept that taxes are bad, and that government shouldn’t be expected to provide for its citizens. [except of course for their own very generous benefits!] Many others, especially in the private, for-profit sector, argue that the profit motive will almost always prove a more reliable incentive than altruism and will do so far more efficiently than the government can.

Well, it is not hyperbole that we as a society are paying a huge price for these years of cutbacks. Students haven’t been taught about the Constitution and rank well below the top 10 countries in tested learning; frighteningly large segments of the society believe that science, including on climate change, is merely political opinion; homelessness is on the rise throughout the country; the US healthcare system – yes that famous private system – is the most expensive in the world with far too many inadequately insured, and there are still those who believe it should be exclusively a private responsibility…. And it isn’t getting better.

As a quondam educator about the history of American philanthropy, I would be the first to acknowledge that the issue of who should have responsibility for what is as old as the US, and people can have legitimately differing opinions about which sector should be accountable for which parts. And there is a long and legitimate tradition of those in our philanthropy sector who will affirm that private philanthropy’s value added is that it need not be bureaucratically handcuffed, that it can respond to needs without political interference or a plebiscite, and it can take risks that government cannot and should not take. The idea of private philanthropy as society’s risk capital is a continuing and honorable theme.

There is certainly validity to those arguments – as far as they go. They fail, in my opinion, when they make two derivative arguments: that in the absence of government funding, private philanthropy should fill in the gaps, and that private philanthropy has the capacity to do so.

It is hard to overstate how the latter arguments are flawed. There are many “proof texts”: The largest private foundation in the world has an endowment of about $50B with a grantmaking budget of about $5-6B; compare that with the budget of the NIH – itself having suffered cutbacks over the years: as of this year, its annual budget is over $30B.

Or to put it another way, if those in the congress who wish to cut SNAP funding – the most important public initiative to reduce food insecurity – were to have their way, the amount of cutbacks alone would be greater than the sum of the endowments of all US foundations. Examples abound.

Or to put it another way, a private sector company worth $50B would be so far down the list that it would only be the 110th largest company in terms of value. And very few of the other top foundations would crack the Fortune 500 list. Imagine the naivete in thinking that this sector can have the resources to solve society’s systemic challenges alone or replace government funding.

It is true that foundation funding trails individual giving, so the true capacity of private philanthropy may be greater than this. But, even so, nowhere near the need.

But even if it could, the real question is: should it? After all, the very nature of private philanthropy is that it is not accountable to a plebiscite and that it has no obligation to respond to all of society’s needs even when not popular. There is nothing, other than good will, that would guarantee that the highest risk populations are not forgotten, or that there would be socially responsible standards for health, education, and more. If history is any indication, many of the wealthiest are perfectly happy to give their largest gifts to the most secure and prestigious organizations, universities, museums, and hospitals – and to underfund others. [Yes, I know these are gross generalizations and this giving is under severe attack in some circles, but the long-term numbers bear out the generalizations.]

Do we really want a society where retirement funds are fully subject to our own private investment acumen? That our health care depends on how much we can manage to pay and too bad for us if we cannot? That educational institutions only offer art or athletics or specialized attention if they are in wealthy neighborhoods?… In a country with 350 million residents, such a financially driven system of human services and health care and education is morally suspect and of dubious efficacy.

What about our role, then? We do have an obligation to fund that which government is not yet willing to do such as take risks, advocate for systemic solutions, utilize our unique vantage of not being subject to quarterly reports or biennial election to fund over time and with limited political overhang. We have the ability to bridge sectors, to develop new models, to leverage our resources even if they are more limited than many assume, and to be a moral voice of values.

Not all of us will agree on how to use our resources, for what we should advocate, who should be allowed to decide, and what the ultimate role of government will be in all of this. But we, more than any other sector, should be able to model those dialectics in ways that ennoble our society, despite or because of our disagreements – quite the opposite of the denigrating cesspool that surrounds the current administration.

Government funding alone won’t solve the morass we are in but honoring the legitimacy of taxes is a start. And, let’s be honest, if our sector doesn’t acknowledge our ability to help influence those policies, policies that reinforce why we exist and what we can do, then we are only playing into the hands of those who would either trivialize our role, or worse, magnify it beyond comprehension or credibility. Either way, we, and society as a whole, will be much the worse for it.

#354 – Trust-An Elusive Attribute, Even in Philanthropy

October 22nd, 2019

Richard Marker

Reader Alert: This post and the next have a pretty clear political point of view.

In June, the regional association of grantmakers, of which we are members, sponsored a conference on Census2020. The challenge of every census has been to produce as accurate a census count as possible so that allocation of federal dollars and Congress can reflect real needs and proportional representation. The Census Bureau readily acknowledges that certain at-risk communities are consistently undercounted, meaning, of course, that certain wealthier – and, not surprisingly, whiter – communities are over-weighted.

Next year’s census is even more challenging and is the first where an Administration has overtly tried to politicize it. Fortunately, the Supreme Court called them on it and didn’t allow a rogue question on citizenship to be a last-minute question on citizenship. Nevertheless, the damage was done and those who have developed a distrust of the government’s actions and intentions appear likely to be reluctant to participate regardless of the status of that single question.

There are many subsets of America to which this applies. Persons of color, immigrants, Hispanic and Latino populations, Muslims, those who don’t own their own homes, non-English speakers from anywhere are only some of those identified. Recognizing how crucial these numbers are for accuracy and equity, the philanthropy community throughout the United States has mobilized to help get as close as possible to full participation. June’s conference tried hard to avoid research abstractions and to focus explicitly on “interventions that work.”

Here is the kicker, though. The conference invited panelists on whom the success of these interventions depends. They are trusted intermediaries such as clergy, community leaders, social service workers, immigrant aid attorneys, and more. What we heard was that many of them were, themselves, reluctant to push their constituents to fill out the census forms. Given this administration’s abuses of personal rights, the outrageous tactics of ICE, and the assumption that there is no such thing as confidentiality as far as the government is concerned, these influencers were not prepared to put their own credibility on the line. And while they acknowledged that there has always been some of this sentiment, there was absolute agreement that the current administration breeds a level of fear and distrust among the populations who are most in need of the resources the census will yield beyond that ever seen before. People are in hiding, if not literally certainly in their willingness to comply with anything that might identify them to the government. [A reminder that the next 10 years of government allocations will rely on these numbers!]

This level of distrust is profoundly unsettling. Many of those of us who are funders sitting in those sessions were deeply troubled. The philanthropy world can assist, enable, and support local entities but very few of us are known by or are credible to the folks in the at-risk communities so if our efforts are to succeed, we need those trusted community leaders. If they are hesitant, how can or should we use our resources to address authentic issues of equity that really matter?

This post is not to provide an answer to that question but rather to show that the “trust” issue even includes us.

Which brings me to a consultation I attended yesterday, sponsored by the same regional association of grantmakers, addressing issues facing immigrant communities and an attempt to articulate ways in which the philanthropy world can make a difference Many of the issues were re-articulation of the Census2020 conference, and migrant issues will not soon go away as we have yet to address climate enforced migration that will only grow. Only an ostrich like administration can pretend otherwise.

The last question the panelists were asked was how we funders can help. There were a number of focused financial proposals, but then their answers switched to how we should or should not behave. For example, they argued, even if and when we sponsor convenings, we should absent ourselves. These groups felt that they would be too vulnerable to expose their authentic challenges, to reveal their failures, and to admit to the implications of the consistent pattern of underfunding they face.

Put simply, they don’t trust us. No, not in the way they distrust government misbehaviors but, rather, for our inability to keep our privilege in check, our power under control, or our attempts to enforce our perceptions of what they should do. These were not unsophisticated panelists who never deal with funders all the time; in some cases, they do so with real success. Yet their sentiments were unanimous.

Many readers, I know, are scratching your heads. Hasn’t our sector bent over backwards in recent years – for example, to understand how we are perceived or to engage grantee stakeholders in our decision making? These attempts were not mentioned by any of them. Whatever we have been talking about in our conferences, in our periodicals, in our classes don’t seem to have made their way into the perceptions or real-life experience of grantees.

We are paying a price, some of our own doing, to be sure, but even more by a generation or two of dissing the efficiency/efficacy/ethics of all institutions. Like it or not, whether we are on the left or right side of the political spectrum, philanthropy is part of the power landscape and our motives are perceived to be as suspect as the rest.

I don’t want to be simplistic about any of this. There are deep systemic injustices and inequity. Many of us have, directly or indirectly, been the beneficiaries. Our roles going forward are not simple [see my subsequent post expanding on this question.] And I certainly want to acknowledge the work of so many colleagues who have tried hard to make honesty and trust possible, who have listened hard to the often sobering feedback about our affect and procedures, and who have made genuine attempts to redesign funding strategies to be more authentically responsive and participatory.

But yesterday’s session underscored how far we have to go. And I don’t just mean in our grantmaking.

A healthy civil society can only exist when there is trust. It shouldn’t be blind trust, but it does require trust earned by some institutions, some people, some sectors. We in the funding world have a particular responsibility since our funding, our advocacy, and our affirmative sustaining of institutions are indispensable. No, we cannot and must not pretend that we can do it all, that we alone can correct years of sewn cynicism, or that we can easily break down the inherent power imbalance that defines us.

We must, though, learn how to make the difference at a time when there are deep breaches in belief that any institutions have the best interests of their stakeholders at heart. We need to earn their confidence that we mean it.

No, we cannot do it alone, but it cannot and will not happen without us.

#353 – A Philanthro-ethics Choice of Long Ago – Was I Wrong?

October 16th, 2019

Richard Marker

Over the last few years, the underlying ethical challenges that all of us, on both sides of the philanthropy table, face have surfaced because of far too many abuses and embarrassments in our sector. Sad, indeed. In its most recent issue, the Chronicle of Philanthropy focuses our attention on those ethical dilemmas faced by fundraisers. As most readers know, my own work on philanthro-ethics focuses on the other side, on the ethical responsibilities on the funder side of the table but the issue that stimulated this post goes back a few professional incarnations ago.

As many of you know, before I was on the funder side full time, I had a long run of executive roles on the nonprofit side. Those roles well positioned me for what I have done for the last quarter century as a funder: executives in the nonprofit sector are faced with choices between breadth and depth, the recruitment and support for professionals with great responsibilities with all too few resources, the need to understand competing stakeholders, and balancing the measures of short term successes with long term impact are all the daily work of non-profit CEO’s. Sounds a lot like the issues we funders have as well.

In the early 80’s to mid-90’s, I had CEO responsibilities for many programs with their own facilities. None of them had deferred maintenance funds, most were inadequately designed or too small for their current and projected utilization, or simply needed to be replaced, and the expansion of our system called for several new facilities. This challenge was not unique to the Hillel Foundation – it characterized a huge swath of nonprofit facilities from universities to churches and everything in between. All too many were built in the 40’s, 50’s, and 60’s by institutions so happy to get capital gifts, any capital gifts, that they never planned for or insisted upon the long-term needs of those facilities. But just because it was not a unique problem didn’t make it any less urgent. [Much of this has changed as many more funders are willing to provide much larger capital gifts to all sorts of institutions with greater sophisticated understanding of what longer term needs are.]

In another context, I would be happy to write more extensively about how we, largely successfully, managed this and set up the conditions that would preempt these capital challenges from continuing into the future. Below I mention one. But for this post I would like to tell only about one approach that I found easy to dismiss at the time but wonder how one might respond today.

One day, someone scheduled an appointment to discuss a proposal. This fellow, whose name I have long forgotten, had developed a particular expertise. He facilitated getting bond funding for non-profit organizations, especially those whose size put them below the normal bond radar. While our needs were in the $m’s, he would fold “our” bond request into a much larger public bond offering of a much greater amount. These publicly issued bonds had low interest rates and would provide all of the capital we needed for re-hab and construction projects in one easy step. Universities and hospitals and other large institutions do this all the time; no reason, he argued, why relatively smaller non-profits shouldn’t benefit as well.

But here was the kicker that turned me off immediately: when I pointed out that I couldn’t see how we would be able to repay the bond amounts in a timely manner, he tried to seal the deal by assuring me that the bonds would never really have to be re-paid. If memory serves, he said that bond holders understood the risks when buying the bonds and they would be very unlikely to come after a non-profit like ours for non-payment.

It struck me at the time as more than a bit sleazy and I politely thanked him and let the proposal finds its way to a circular file. Eventually, we did get the capital for most of our projects, and by then the board and I had developed a policy that no capital project would be accepted without an accompanying endowment. [Whatever one thinks about endowments in general, it is clear that facilities have new, predictable, and substantial costs over time that should be accounted for from the very beginning. It was a gutsy but persuasive policy that worked.]

It is now well over 3 decades since that episode. In my current roles which are now restricted to the funder side, I teach about using PRI’s to accomplish philanthropic goals. To remind those who may not be familiar with the term, a Program Related Investment is money taken from the grants side of a foundation’s ledger that can be given with the desire for or expectation of a financial return. That might be an investment in a for-profit firm aligned with the grantmaking mission of a foundation or it can be a loan to a grantee. A straightforward example of a PRI: a non-profit has a short-term cash flow crisis for any number of legitimate reasons. A foundation chooses to lend the non-profit sufficient capital to tide it over at very favorable terms. If the anticipated money comes in to the non-profit, the loan is repaid. A foundation then must re-grant that money within a certain time frame. But should the non-profit not repay the loan, the foundation must reclassify that loan as a “grant” to that non-profit. [There are more technical issues, but for our purposes this example should suffice.]

In thinking about PRI’s, I began wondering if there might be a similarity between a foundation PRI loan and a public bond. Both are for public good, both provide funds that a nonprofit desperately needs, and both carry the risk of non-repayment. [Bonds are rated according to that risk.]

To be sure, there are very different decision-making processes, different stakeholders, and different legal requirements. But in many ways there are more similarities.

Now let it be said that in the example I gave, the sleaze factor was quite relevant. It seemed ethically problematic that the sales pitch so quickly affirmed that one could take these funds and not feel any repayment responsibility. From my perspective at the time, that was an ethical non-starter.

But given what I now know about PRI’s, I wonder: was I so blinded by the sales affect that I ignored the potential effect? Had I underestimated that the bond raters and the bond buyers would do their own due diligence to determine if we would have been worthy? Had I not overlooked the pattern of philanthropic giving that rewards success – had we demonstrated success in our massive [for us] facility projects might that have changed the giving level of current and potential donors, perhaps making those repayment obligations less elusive? Had I applied a sincere but irrelevant ethics screen that delayed much needed upgrades to our facilities and service systems?

Of course, PRI’s were not very evident in those days, and hindsight is… well, you know. During my time in those executive roles, there was a long litany of ethical, moral, and even legal issues that required a clear ethics grounding if I were to do my job responsibly; if my antennae were too sensitive in this area, it was because I required them in many others.

However, ethics, unlike morality, is often choosing between two credible and often legitimate options. I now wonder if I was too quick to see only one.

#352 A Perennial Question for Family Philanthropy: How and When to Engage Next-Gens

October 8th, 2019

Richard Marker

It is said that if one hears something once, it is an anecdote; if twice, it is coincidence; if thrice, it is evidence. Whether or not that evidence is convincing to researchers or evaluators, three identical conversations within a two-day period does suggest that there is something to talk about.

Last week, I attended the annual Exponent Philanthropy conference. I have lost track of how many of these I have attended – going back to the early years under its prior name Association of Small Foundations – but I can attest that it is always one of the best conferences for funders in which I participate. This year my role was strictly as a participating member so the conversations I am reporting were all serendipitous around dining tables [although, it is only fair to say that those with whom I spoke were aware of my expertise in the family philanthropy area] .

The questions were remarkably aligned: when and how should we engage the next generation in our family philanthropy. It is often a challenge – What is the correct age? How to involve them in decision making? And the like.

Interestingly, the conversations all posited a similar approach. “Let the younger family members research some projects and report back to us.” The arguments were of two sorts: this would be a good educational method and/or it is a way to prove their readiness. When I asked their ages, the next gen folks were all in their 20’s and 30’s. I responded, “so you are giving them homework assignments – but not a vote.” In every other way they are grown-ups, perhaps with careers and families, but in these families they are still given homework assignments and not ready for the grown-up philanthropy table. [“Next Gen” isn’t always age related, by the way. In a few situations in which I have been involved, the “next gen” were in their 60’s and still not given autonomy or a real vote!]

There were a couple of differences in the family situations: in one case, they were concerned that the next gen folks simply didn’t care. Their evidence was that they were not interested in “doing the work” involved. In the other cases, those who spoke to me were concerned that they were sensing some resentment that their offspring were only allowed to propose but not considered full participants in decision making.

When I suggested to each of the family groups that they experiment by giving some discretionary giving authority to their offspring, they all responded as if it was a new idea. This is certainly not a profoundly innovative suggestion; it assumes that folk are much more likely to feel a sense of ownership and responsibility than when they are disenfranchised or implicitly infantilized.

Of course, this approach is not without its challenges: it wouldn’t be a surprise if not every successor agreed with their elders about priorities or style or even values. For those who are the founders, or those who finally got to sit in the decision-seats themselves, these challenges can make them reluctant to let go. Better to stall and hope that, as time goes by, the succession will somehow be pain free. But if families are truly committed to engaging those next generations in their philanthropic commitments, enfranchisement is really the only option. [Yes, I know I am simplifying a whole range of complex family relationships in these few sentences, but the principles are pretty much generic even if their implementation may not be so simple or straightforward.]

The other frequent question has to do with when: If young adults are, generally speaking, old enough, what about teens? Aren’t they used to doing homework? And even be graded for it? Am I really suggesting giving them discretionary privileges over some grantmaking decisions?

Youth philanthropy has become a fast growing subsegment in our field. There are community sponsored teen giving circles and there even courses in high schools where students are given authority over considering and deciding among direct giving proposals. Why not extend that to your family giving as well? The discretionary dollar amount should be smaller, but the conversations and the insights may well prove intriguing, to say the least. After all, we have been reminded this summer that a 16-year-old high school student has had the most eloquent voice in climate change discussions – with more clarity about the existential choices we face than any adult political leader! I suspect that families who want their philanthropy to transition between generations would do well to find their own ways to take their teens seriously.

Now, these comments should not be viewed as the single solution to questions of succession, eligibility, or longevity. As suggested above, every family and every foundation have distinct histories and distinct cultures. And the more people and more generations involved in successor generations the more difficult the enfranchisement process becomes. But sometimes simple proven solutions can make all the difference. For the three families with whom I spoke at Exponent last week, it appears that this single change might well address a growing intergenerational dilemma.

[In reviewing this before publication, it seems appropriate to add this postscript. Our field in in the midst of a robust discussion about the legitimacy of transferring wealth between generations or of the continued exercise of privilege that accompanies it. In other settings and posts I can return to these questions of equity. Nevertheless, the issue of engaging successor generations in family decision-making regarding philanthropy even if there is no formal structure can apply regardless of the depth of one’s pockets. These lessons can apply independent of the larger public policy issues we must certainly continue to examine.]